Emily Harbison

The Department of Labor’s newly issued opinion letter provides good news for employers who use tipped workers. On November 8th, the DOL reversed its previous “80/20” guidance on use of the tip credit. The tip credit permits employers to pay employees in tip-based positions, such as bartenders and waiters, a lower hourly wage than the federally mandated minimum wage (with the thought that earned tips will make up the difference). Under the previous “80/20” rule, employers were barred from paying the lower cash wage to tipped employees who spent more than 20% of their time performing non-tip generating duties such as setting tables or cutting lemons.

Government contractors are familiar with the obligation to retain minority or women-owned businesses as subcontractors to obtain government work. Increasingly, apex private sector businesses require participation by minority or women-owned businesses as a condition of obtaining work, as well.

A recent decision by the federal court for the Southern District of New York is a cautionary tale, and highlights the care required when terminating a minority business enterprise (MBE) sub-contractor. Annuity Funds Operating Engineers Local 15 v. Tightseal, No. 17-CV-3670 (S.D.N.Y. August 14, 2018).

In recent years, joint employer liability has emerged as a persistent threat for companies who use franchise business models. Franchisors are increasingly facing claims brought by employees of franchisees for entitlements flowing from their employment. The outcome in these cases is unpredictable because the law is undergoing change. As such, the joint employer aspects of franchising arrangements can prove to be a minefield for the unwary and are a growing global concern.

Click here to read the full article (originally published in the September 2018 edition of Franchising World), which covers key developments in joint employer liability for franchisors operating in Australia, Canada and Mexico and describes a proactive approach to help mitigate risk.

In 2014, former employees of various Jimmy John’s franchisees brought a collective action against their former franchisee employers and against Jimmy John’s Franchise, LLC. The former employees alleged they were misclassified as exempt under the FLSA and consequently denied overtime pay. They also claimed that Jimmy John’s, as an alleged joint employer, was jointly liable for their damages.

On summary judgment, the Court applied a modified version of the Seventh Circuit’s Moldenhauer test to determine joint employment. It stated that all of the factors reviewed boiled down to one essential question: whetherJimmy John’s exercised control and authority over franchise employees in a manner that caused the FLSA violation (at least in part). And, the Court determined that the evidence demonstrated that the franchise owners determine how to classify and compensate franchise employees — not Jimmy John’s. As such, Jimmy John’s did not exercise control over the alleged FLSA violation and was not a joint employer.

Click here to read more on the decision and its impact on franchisors.

Pay equity is a hot button issue for employers in the United States for a number of reasons—reputational concerns are triggered with increasing shareholder demands for transparency; activist investor groups are pushing companies, particularly in the financial services and technology industries, to disclose gender pay data; and, in the wake of pay equity in the news, employees are asking more questions about the issue.

Compounding the pressure, the gender pay gap also can impact talent acquisition. A recent Glassdoor survey found that 67% of US employees say they would not apply for jobs at employers where they believe a gender pay gap exists. The impact is magnified when looking at millennials. Approximately 80% of millennials, as noted in the Glassdoor survey, say they would not even apply for a job if they believed the company had a gender pay gap, which drives home the point that focusing on equality is, among other things, essential for a positive employer brand in the US market.

Although not a franchise case, the decision cites two cases that used the ABC test to determine that franchisees were employees of a franchisor, not independent contractors. Assuming the Dynamex test is applied to franchising, it could have far-reaching consequences for our franchise clients with operations in California.

As we previously posted, on January 5, 2018, the Department of Labor did away with its previous six-factor test and announced a new “primary beneficiary” test to determine whether interns and students working for “for-profit” employers are entitled to minimum wages and overtime pay under the Fair Labor Standards Act. See our previous post HERE, as well as the DOL’s Fact Sheet #71 HERE. While employers are required to pay employees for their work, in some circumstances, interns may not actually be employees under the FLSA, and therefore, can be unpaid.

Whether your company is already planning to bring on unpaid interns, or to the extent your company would like to explore the possibility of a new unpaid internship program, you will want to consider the DOL’s new primary beneficiary test so as to guard against potential costly claims for pay and/or overtime.

If you’re an employer with calls coming in from concerned managers or an employee with the immigration message boards on constant refresh, you’re not alone.

As if the executive orders and policy shifts in the last year weren’t enough to disrupt the workforce, potential changes on the horizon for certain employment authorized spouses of H-1B visa holders (known as H-4 visa holders) are a cause for concern among employers and employees, alike.

On February 21, 2018, the US Supreme Court narrowed the definition of the term “whistleblower” under the Dodd-Frank Act. The Court found that to be a “whistleblower” covered by Dodd-Frank’s anti-retaliation provision, an employee must report concerns about their employer’s conduct to the Securities and Exchange Commission. In other words, an employee who reports such concerns only internally is not entitled to protection under Dodd-Frank.

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